As one of few qualified auditors in Essex, our team of experts have considerable experience with client money audits and offer detailed insight into SRA compliance issues.
Here we outline everything you need to know about SRA audits. What they are, why they’re important and how TBL Accountants can support you.
Who are the SRA?
The Solicitors Regulation Authority (SRA) regulates solicitors and law firms in England and Wales. Their aim is to make sure that consumers and firms have an appropriate level of assurance of the adequate controls over the handling of money belonging to clients or third parties.
What is an SRA client money audit?
It is a legal requirement that all solicitors submit an annual report outlining any money passing through their clients’ accounts and highlight any incidents in which this money has been put at risk.
If a firm at any time during an accounting period, held or received client money, then they must obtain an accountant’s report for that accounting period within six months of the end of the period.
The report must be prepared and signed by an accountant who is a member of one of the chartered accountant bodies and is a registered auditor.
The SRA report must include the following:
- Provide proof that any client money is kept safe and paid promptly into a separate client money bank account
- Provide reassurance that the solicitors are set up to safeguard client money through appropriate systems, controls and records
- Provide reassurance to clients and the general public that monies are held appropriately
- If needed, promptly provide the SRA with any issues/information relevant to the protection of client money
The report only needs to be sent to the SRA if it shows any failures to comply with the rules. Breaches arising from administrative errors are not likely to be significant and therefore, if minor and not repeated, do not need to be submitted to the SRA.
The SRA rely on the accountant’s professional judgement to assess the firm’s compliance with the Accounts Rules. This is why audits must be carried out by experienced chartered accountants with extensive knowledge of SRA audits.
Why are SRA audits important?
SRA audits are important as they reassure the public, including existing and prospective clients of a solicitors or legal firm, that their money is being dealt with in a responsible and respectful manner.
A breach of client money processes could be extremely damaging for both the firm, individual and client involved, so it’s imperative that the correct practices are followed.
What is the SRA audit process?
We aim to make the SRA audit process as hassle-free as possible. The exact requirements of the audit are to be discussed with the individual solicitors, but they must include:
- Client accounts and their uses
- Withdrawals from these accounts
- Duty to correct breaches upon discovery
- Client accounting systems and controls
- Operation of joint accounts
- Operation of a client’s own account
- Storage and retention of accounting records
The presence of one or more serious factors such as unreplaced shortfalls, fraud or dishonestly or failure to provide documentation is likely to lead to a qualification for submission to the SRA.
Why choose TBL Accountants for your SRA Audit?
Are you a solicitor looking for help with your accounts and SRA reports? An SRA report must be prepared and signed by an accountant who is a member of one of the chartered accountant bodies and is a registered auditor.
As one of few auditors in Essex offering thus service, our team of experts have considerable SRA experience and offer detailed insight in o compliance issues.
If you would like to chat about your SRA audit or how TBL can support your legal firm with accountancy, please do get in touch. You can contact the team here, or call our Southend office on 01702 466 886.